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Comment on Class and Health

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Maggie,

A couple of thoughts on this.

First, Americans who work in physically demanding and/or dangerous jobs such as coal mining, steel manufacturing, auto manufacturing, etc. do not live as long, on average, as the population overall despite comparatively good wages and benefits. I don’t think countries like Iceland and Switzerland have nearly as many people relative to their populations working in these jobs as the U.S. does. Japanese people in the U.S. also live longer than most people. I suspect that it’s due to a combination of diet and genetics. However, as they are here longer and adopt a more westernized lifestyle and diet, they probably don’t live as long as Japanese people in Japan with comparable socioeconomic status do.

Second, regarding social inequality, I think our system, does, to a large extent, reflect our more entrepreneurial culture. While reasonable people can differ about how much taxes should be raised on higher income people to both reduce inequality and raise money for worthwhile public priorities, I think it is important to remember that there could also be economic costs. In Western Europe and Canada, the total tax burden on middle and upper income people generally exceeds 50% of gross income. It’s expensive to sustain a welfare state with a generous social safety net. I think, at the end of the day, those countries, which embraced socialism decades ago, are trading less inequality and more economic security for less economic growth and less opportunity, especially for its younger people.

If young people do manage to find a career track job after college,
they get to pay very high taxes for (1) education which they no longer
need since they completed theirs, (2) healthcare, which, as a group,
they need far less of than their elders, and retirement security which
is decades away for them. In America, they would probably have more
economic opportunities open to them and would definitely pay
considerably lower taxes (relative to income).

While I think there is certainly room to raise tax rates on
qualified dividends and capital gains, if Congress ever pushed the top
marginal income tax rate back to 70% as it was before Reagan became
president and/or the capital gains tax rate were raised back to the 40%
plus rate that prevailed under Jimmy Carter, I think the economic
consequences would be adverse. Most economists will tell you that at
some point, a higher tax burden (relative to both individual income and
GDP) will reduce economic growth, but there is little or no agreement
as to just where that point is.